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Instructions for Form 706 (Rev. September 2020)

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Instructions for Form 706 (Rev. September 2020) Userid: CPM Schema: Leadpct: 100% Pt. size: 9.5 Draft Ok to Print instrx AH XSL/XML Fileid: … ons/i706/202109/a/xml/cycle03/source (Init. & Date) _______ Page 1 of 54 9:38 - 7-Sep-2021 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing. Department of the Treasury Instructions for Form 706 Internal Revenue Service (Rev. September 2021) For decedents dying after December 31, 2020 United States Estate (and Generation-Skipping Transfer) Tax Return Section references are to the Internal Revenue Contents Page Contents Page Code unless otherwise noted. Specific Instructions .............5 Schedule PC—Protective Revisions of Form 706 Part 1—Decedent and Claim for Refund ......... 49 Executor ...............5 Continuation Schedule ....... 51 For Decedents Dying Use Part 2—Tax Computation ......5 Index ..................... 52 Revision of Part 3—Elections by the Checklist ................... 53 Form 706 Executor .............. 10 After and Before Dated Part 4—General Information ... 15 Future Developments December 31, January 1, July 1999 Part 5—Recapitulation ....... 17 1998 2001 Part 6—Portability of For the latest information about December 31, January 1, November Deceased Spousal developments related to Form 706 and 2000 2002 2001 Unused Exclusion its instructions, such as legislation December 31, January 1, August (DSUE) ............... 17 enacted after they were published, go to 2001 2003 2002 Schedule A—Real Estate ..... 19 IRS.gov/Form706. December 31, January 1, August Schedule A-1—Section 2002 2004 2003 2032A Valuation ......... 20 December 31, January 1, August Schedule B—Stocks and 2003 2005 2004 Bonds ................ 22 What's New December 31, January 1, August Schedule C—Mortgages, 2004 2006 2005 Notes, and Cash ......... 24 Various dollar amounts and limitations December 31, January 1, October Schedule D—Insurance on in Form 706 are indexed for inflation. 2005 2007 2006 the Decedent's Life ....... 25 For decedents dying in 2021, the December 31, January 1, September Schedule E—Jointly Owned following amounts are applicable. 2006 2008 2007 Property .............. 25 • The basic exclusion amount is December 31, January 1, August $11,700,000. 2007 2009 2008 Schedule F—Other Miscellaneous Property .... 26 December 31, January 1, September • The ceiling on special-use valuation 2008 2010 2009 Schedule G—Transfers is $1,190,000. December 31, January 1, July 2011 During Decedent's Life ..... 27 • The amount used in figuring the 2% 2009 2011 Schedule H—Powers of portion of estate tax payable in December 31, January 1, August Appointment ........... 29 installments is $1,590,000. 2010 2012 2011 Schedule I—Annuities ....... 30 • The basic credit amount is December 31, January 1, August Schedule J—Funeral $4,625,800. 2011 2013 2012 Expenses and Expenses December 31, January 1, August Incurred in Administering The IRS will publish amounts for future 2012 2017 2013 Property Subject to years in annual revenue procedures. December 31, January 1, August Claims ............... 32 2016 2018 2017 Schedule K—Debts of the December 31, January 1, November Decedent and Mortgages Reminders 2017 2019 2018 and Liens ............. 33 Schedule R-1 is now a separate December 31, August Schedule L—Net Losses form. Beginning in 2019, Schedule R-1 2018 2019 During Administration and Expenses Incurred in will no longer be part of Form 706; Administering Property instead, you will need to obtain a Contents Page Not Subject to Claims ...... 34 separate Schedule R-1 to complete and General Instructions .............1 Schedule M—Bequests, file with Form 706. Purpose of Form ............1 etc., to Surviving Spouse (Marital Deduction) ....... 35 Identifying exhibits. Copies of tax Which Estates Must File .......2 Schedule O—Charitable, returns filed with Form 706 must be Executor .................2 Public, and Similar Gifts identified as exhibits to the Form 706. When To File ..............2 and Bequests ........... 38 Where To File ..............2 Schedule P—Credit for General Instructions Paying the Tax .............3 Foreign Death Taxes ...... 39 Signature and Verification ......3 Schedule Q—Credit for Tax Purpose of Form Amending Form 706 .........3 on Prior Transfers ........ 40 Supplemental Documents ......3 Schedules R and R-1— The executor of a decedent's estate Generation-Skipping uses Form 706 to figure the estate tax Rounding Off to Whole Transfer Tax ........... 43 Dollars ................4 imposed by chapter 11 of the Internal Schedule U—Qualified Penalties .................4 Revenue Code. This tax is levied on the Conservation Easement entire taxable estate and not just on the Obtaining Forms and Exclusion ............. 47 Publications To File or share received by a particular Use ..................4 beneficiary. Form 706 is also used to Sep 07, 2021 Cat. No. 16779E Page 2 of 54 Fileid: … ons/i706/202109/a/xml/cycle03/source 9:38 - 7-Sep-2021 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing. figure the generation-skipping transfer Note. Under the special rule of person in actual or constructive (GST) tax imposed by chapter 13 on Regulations section 20.2010-2(a)(7)(ii), possession of any property of the direct skips (transfers to skip persons of executors of estates who are not decedent is considered an executor and interests in property included in the required to file Form 706 under section must file a return. decedent's gross estate). 6018(a), but who are filing to elect portability of the DSUE amount to the Executors must provide surviving spouse, are not required to documentation proving their status. Which Estates Must File Documentation will vary but may include For decedents who died in 2021, Form report the value of certain property eligible for the marital deduction under documents such as a certified copy of 706 must be filed by the executor of the the will or a court order designating the estate of every U.S. citizen or resident: section 2056 or 2056A or the charitable deduction under section 2055. executor(s). A statement by the a. Whose gross estate, plus However, the value of those assets executor attesting to their status is adjusted taxable gifts and specific must be estimated and included in the insufficient. exemption, is more than total value of the gross estate. See the $11,700,000; or instructions for Part 5—Recapitulation, When To File b. Whose executor elects to transfer lines 10 and 23, later, for more You must file Form 706 to report estate the deceased spousal unused information. and/or GST tax within 9 months after the exclusion (DSUE) amount to the date of the decedent's death. If you are For more specific information, see surviving spouse, regardless of the unable to file Form 706 by the due date, the instructions for Schedules A through size of the decedent's gross estate. you may receive an extension of time to I. See the instructions for Part file. Use Form 4768, Application for 6—Portability of Deceased Spousal U.S. Citizens or Residents; Extension of Time To File a Return Unused Exclusion, later, and Nonresident Noncitizens and/or Pay U.S. Estate (and sections 2010(c)(4) and (c)(5). Generation-Skipping Transfer) Taxes, to File Form 706 for the estates of To determine whether you must file a apply for an automatic 6-month decedents who were either U.S. citizens extension of time to file. return for the estate under (a) above, or U.S. residents at the time of death. add: For estate tax purposes, a resident is Portability election. An executor can 1. The adjusted taxable gifts (as someone who had a domicile in the only elect to transfer the DSUE amount defined in section 2503) made by the United States at the time of death. A to the surviving spouse if the Form 706 decedent after December 31, 1976; person acquires a domicile by living in a is filed timely, that is, within 9 months of 2. The total specific exemption place for even a brief period of time, as the decedent's date of death or, if you allowed under section 2521 (as in effect long as the person had no intention of have received an extension of time to before its repeal by the Tax Reform Act moving from that place. file, before the 6-month extension period ends. of 1976) for gifts made by the decedent Decedents who were neither U.S. after September 8, 1976; and citizens nor U.S. residents at the time of Extension to elect portability. 3. The decedent's gross estate death file Form 706-NA, United States Executors who did not have a filing valued as of the date of death. Estate (and Generation-Skipping requirement under section 6018(a) but Transfer) Tax Return, Estate of failed to timely file Form 706 to make the Gross Estate nonresident not a citizen of the United portability election may be eligible for an The gross estate includes all property in States. extension under Rev. Proc. 2017-34, which the decedent had an interest Residents of U.S. Possessions 2017-26 I.R.B. 1282. Executors filing to (including real property outside the elect portability may now file Form 706 United States). It also includes: All references to citizens of the United on or before the second anniversary of • Certain transfers made during the States are subject to the provisions of the decedent’s death. sections 2208 and 2209, relating to decedent's life without an adequate and An executor wishing to elect decedents who were U.S. citizens and full consideration in money or money's portability under this extension must residents of a U.S. possession on the worth, state at the top of the Form 706 being date of death. If such a decedent • Annuities, filed that the return is “Filed Pursuant to became a U.S.
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